The sales and tax tips help your business to develop an effective proactive sales tax strategy which helps you to get audit-ready. Businesspersons find it tough to understand how to implement the safeguards and systems, monitor the changing statutory rules, and find the right methods to collect the right sales and use the tax catering to the right jurisdiction at the right time, all this can be difficult to maintain for even the most compliance-minded businessperson. So, we have concocted the following tips to address sales and tax compliance issues.
These handy sales tips will help you sail through the Tax audits with ease.
• Stop underestimating sales tax complexity
As a business grows its sales tax obligations becomes more and more difficult to manage. If you underestimate the complexity of sales tax, you will unwittingly increase your risk of audit. But in order to keep pace with the vast array of tax requirements, you have to put in intelligence, determination and the right tools.
• Figure out tax liability by unravelling changing nexus rules
The link between a business and a taxing jurisdiction requires a sales tax collection and remittance, most businesses are unaware of the dramatic changes to the current nexus laws. To change things, review your current nexus and focus on the applicable rule changes.
• Find out more about products and services which are taxable
Update sales tax rates for any new products and services to bring about any related jurisdictional changes. Focus on utilities, business services, personal services, professional services and so on. Keep reviewing the taxability matrix to keep yourself updated.
• Keep a tab on consumer use tax
Consumer use tax is mostly found as the unpaid tax in audits. Learn the main difference between sales and use tax and adopt a written use tax policy. Track and account for withdrawals from the resale inventory.
• Focus on the changing exemption certificate rules
Businesses that control a large number of exemption certificates find it difficult when audited to link specific certificates with specific transactions. To fix that you need to create an audit trail specifically for certificates. Quickly generate an exemption certificate summary report.
• Find out when and where to remit sales and use the tax returns
Some companies who work extra hard to track and update changes, accurately in sales and use tax rules, but still boundaries and rate changes fail to remit their sales tax precisely. To fix this find out whether your filing schedule has changed in applicable states and whether the states have implemented brand new e-filing or pre-payment needs.
• Address the compliance hurdles
It is imperative that you avoid practices that may increase your risk of audit and also avoid typical filing errors. The filing errors include late payment or payment to the wrong jurisdictions. Remember to update product and service taxability according to the change in rules.
• Know more about the applicable sales tax holiday
Get to know about products and services, which are exempt and up to what value within the purview of tax holiday rules.
Automation is really important right from inventory management to finance and sales, automation is what gives the companies flexibility, agility, and efficiency they need in a still-recovering market. To automate you need to identify the manual processes which show the lowest return on investments of time and money.
• Seek help
Companies valiantly trying to collect, file, and report sales and use taxes find it really difficult to handle everything. To address this issue outsourcing and automating their payroll management can help!
To answer all your queries regarding sales tax, contact tax consultants in Chennai if you are based there and you will be able to manage sales tax without any hiccup.